Chennai, Dec 14 (Inditop.com) Industry officials are unhappy with the government’s “lethargic attitude” in framing the rules for the Warehousing Act, which they claim is starving farmers and traders of the much-needed liquidity they could get from warehouse receipts.
The Warehousing (Development and Regulation) Act was enacted in 2007 to enable farmers to keep their farm produce in certified warehouses and use the receipts issued against it as a negotiable instrument and improve their cash liquidity without resorting to distress sale.
“It is sheer lethargic attitude of the government in framing the rules of the Act that is delaying the process of making the warehouse receipts negotiable,” an industry official told Inditop preferring anonymity.
Presently banks do not extend fund assistance based on warehouse receipts suspecting the quantity and quality of the farm produce mentioned on them.
“Warehouse receipt funding has not taken off due the reluctance of banks which is linked to the credible warehousing system and the absence of legal environment,” R. Ramaseshan, managing director and CEO, National Commodity and Derivatives Exchange Ltd (NCDEX), told Inditop.
He said the warehousing law would enable the farmers and others to avail bank funding and improve their liquidity.
“While the demand for farm products will be throughout the year, its harvest happens at on go. Farmers need not resort to distress sale of their produce when the market is flooded with the produce post harvest,” he added.
NCDEX is the country’s largest agricultural commodity exchange in the country with 98 percent of its business derived from trading in farm produce.
He said the commodity exchange business will get a fillip if warehouse receipts are made negotiable.
Refuting the charge that online trading and futures are responsible for the steep rise in the prices of essential items, he said: “Prices of commodities banned from futures trading have gone up. It only proves there are other reasons -demand and supply- for the price increase.”
He said the country should reduce the inefficiencies in the marketing of the farm produce.
“There has been no conscious move on the part of the government to look at this aspect after the green revolution that increased the farm yield.”
